Corporate’s changing face

It used to be that a shampoo bottle would have printed on it a straightforward pitch for soft, clean, manageable hair.

Now, even the shampoo bottle has become a manifesto to the changing values about community, environment, and the economy. “…because like you we care for earth and hair,” the bottle further reads. “USDA certified organic, 90 percent post-consumer recycled bottle and 100 percent certified wind power, vegan and no animal testing.”

And the shampoo bottle is not alone. This is just one example of how corporate social responsibility is changing and how an increasing number of Kentucky companies are making decisions, developing public policy and impacting the lives of their employees and the communities in which they operate.

Society has moved beyond just expecting corporations to comply with regulations to something even bigger corporate ethics and culture. Corporations are adapting to this cultural shift, and if we want to know what the future holds we need to take a deeper look inside Kentucky’s corporate citizens.

One example of this in Kentucky is how L’Oreal in northern Kentucky, a 2016 World’s Most Ethical Company, has embraced this cultural shift. “Over the last 10 years, we have seen growing expectation for companies to behave ethically,” said Jean-Paul Argon, Chairman and CEO of L’Oreal. “The next 10 years will see ethics becoming no longer a ‘nice to have’ but a fundamental prerequisite to any organization’s license to operate.”

Corporate social responsibility is now in a place where quality, safety and compliance were 20 years ago. It’s not enough to have just a person or even a sustainability department; it’s instilling those values in every employee, supplier and making sure the product reflects those values. Looking at the 2015 Fortune 50 U.S largest corporations with facilities in Kentucky, most have identified corporate social responsibility goals. The same can be said for the Fortune 500 U.S. corporations headquartered in Kentucky: Humana, YUM! Brands, Ashland, General Cable and Kindred Healthcare.

Social responsibility standards are also evolving to meet the needs of these corporations.

One way this can be seen is in United Parcel Service’s 2014 Corporate Sustainability Report, which utilizes the Global Reporting Initiative’s framework. This reporting standard helps organizations communicate the impact of business on sustainability issues and allows citizens access to business sustainability information in a standardized way to aid better decision making.

Other common frameworks include the Carbon Disclosure Project (CDP) and the International Standard Organization (ISO) 26000 standard, each with different missions. The CDP represents a type of “tell all and be judged” program that relies on the market to force changes through measurement and disclosure of environmental information. ISO 26000, on the other hand, is “old school,” comes with a solid reputation and a long history of management systems certifications. While the ISO 26000 standard cannot be certified today and are guidelines, it’s not hard to imagine the evolution of 26000 to full certification of social responsibility.

Some companies, who may not want standards or formalized frameworks, find it easier to join with others through a global organization like the United Nations Global Compact (UNGC). The UNGC is simply a voluntary call to action for companies “to align strategies and operations with universal principles on human rights, labor, environment and anti-corruption.” In Kentucky, General Electric (GE), Ford, Lexmark and PepsiCo all have signed onto the Global Compact and voluntarily pledged to create a culture of integrity across their organizations.

Knowing where these corporations are headed is essential to ensuring that Kentucky is ready to meet their needs.

At GE, they take climate policy head on. In February 2014, GE announced a new goal for greenhouse gas reductions through 2020. This new goal is set at a 20 percent reduction from a 2011 baseline of operational greenhouse gas emissions. GE’s Climate Policy states, “The scientific consensus is that fossil fuels used to generate electricity generation [sic] and power transportation emit amounts of carbon dioxide that are changing our climate. GE supports carbon policies that aspire to reduce emissions and encourage businesses to do what they do best, innovate and compete to create and disseminate new technologies and solutions at the lowest net cost.”

Climate change is just one concern as companies focus on what aligns with their values and culture, like water conservation at Brown-Forman. According to their 2015-2016 Corporate Responsibility Report, “Clean and readily available water is a vital ingredient of our products, so we have always had a strong interest in protecting water quality and availability.”

Putting words to action, Woodford Reserve Distillery has partnered with The Nature Conservancy and launched a multi-year restoration project replanting the area alongside Glenn’s Creek and local pond with native vegetation such as white pond lilies that will help improve the water quality and control algal blooms.